In an SEC filing tonight Sears’ (SHLD) Eddie Lampert disclosed more purchases of auto retailer AutoNation (AN).
Lampert now has just over 72 million shares or in excess of 40% of the total.
Disclosure (“none” means no position):
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In a just release SEC filing, Edward Lampert through his ESL Partners hedge fund has upped his stake in AutoNation (AN) to 71.469 million shares or just over 40% of the total outstanding.
Lampert and individual investor Todd Sullivan now have a controlling interest in the company.
Disclosure (“none” means no position):Long AN
The week’s top insider purchases by dollar amount
Chesapeake Energy Corp (CHK)= $8,197,837
Autonation Inc De (AN)= $8,108,089
U S Auto Parts Network Inc (PRTS)= $5,479,067
Masco Corp (MAS)= $5,373,467
Advance Auto Parts Inc (AAP)= $4,027,086
eLoyalty Corp (ELOY)= $3,643,883
General Electric Co (GE)= $3,519,818
Colonial Bancgroup Inc (CNB)= $3,231,103
Gentek Inc (GETI)= $2,078,775
Extra Space Storage Inc (EXR)= $1,962,000
Flagstar Bancorp Inc (FBC)= $1,866,900
Integramed America Inc (INMD)= $1,790,000
Energy Transfer Equity L P (ETE)= $1,325,946
Prospect Capital Corp (PSEC)= $1,238,194
Liberty Media Corp Capital Group (LCAPA)= $1,219,004
Compass Diversified Holdings (CODI)= $1,112,150
Sepracor Inc (SEPR)= $1,048,000
Disclosure (“none” means no position):
The week’s top insider purchases by dollar amount
Chesapeake Energy Corp (CHK)= $8,197,837
Autonation Inc De (AN)= $8,108,089
U S Auto Parts Network Inc (PRTS)= $5,479,067
Masco Corp (MAS)= $5,373,467
Advance Auto Parts Inc (AAP)= $4,027,086
eLoyalty Corp (ELOY)= $3,643,883
General Electric Co (GE)= $3,519,818
Colonial Bancgroup Inc (CNB)= $3,231,103
Gentek Inc (GETI)= $2,078,775
Extra Space Storage Inc (EXR)= $1,962,000
Flagstar Bancorp Inc (FBC)= $1,866,900
Integramed America Inc (INMD)= $1,790,000
Energy Transfer Equity L P (ETE)= $1,325,946
Prospect Capital Corp (PSEC)= $1,238,194
Liberty Media Corp Capital Group (LCAPA)= $1,219,004
Compass Diversified Holdings (CODI)= $1,112,150
Sepracor Inc (SEPR)= $1,048,000
Disclosure (“none” means no position):
I finally get to change the disclosure at the end of this now daily post. In a just released SEC filing Sears’ (SHLD) Chairman Eddie Lampert upped his AutoNation (AN) stake to 71.245 million shares or 39.9% of the total.
Combined with my purchase of AutoNation shares today, Lampert and I effectively have control of, well, 39.9% and change (small change) of the company giving us a controlling interest in the nations largest auto retailer….
So this is what power feels like…… 🙂
Disclosure (“none” means no position):Long AN
After watching value investors dive into the market, time to join them.
Almost exactly a month ago I took a look at AutoNation (AN) and at the time said “I think one could wait until summer to pick up shares at and not pay too much more than today.” Shares sat at $15.96 then a today sit at $15.80.
Having just cashed out of our oil (USO) position there are funds laying around for investment. Being hesitant to put more into the retail sector currently, the retail auto sector does look very appealing.
When you have investors like Lampert, Berkshire’s (BRK.A) Buffett, Leucadia (LUK) and Wilbur Ross entering the sector, it pays to monitor them.
Why AutoNation then? Back in March CEO Mike Jackson did an interview and here is the jist of it:
Forecasts this year call for about 15.5 million cars to be sold. Now, interesting tidbit. On CNBC, CEO and Chairman Mike Jackson was speaking of running his (or any) business. In the interview he said he runs his business for “a 1,000 year flood”. He then said that if auto sales dropped to 10 million units, “a depression” he called it, his business would be “cash flow neutral”. That is his basis for decision making.
As a potential investor, this is fantastic news. It simply means that the business will still produce cash even in an almost devastating economic climate. Wonderful…
A positive cash company in the current economic climate makes for tremendous flexibility competitors will not have. Jackson can reduce debt, repurchase shares or expand. In fact, Jackson has reduced share count by 30% the last two years. The repurchases have allowed EPS to stay flat at $1.44 despite the downturn in the auto industry during that time frame.
In the past two years, U.S. auto retail sales have declined 12 percent, Jackson said in early February and he said that economic downturns run in cycles of 30 to 40 months, and the market is currently 24 months into the downswing.
AutoNation’s markets in California and Florida, who account for half of new vehicle sales drove down earnings last year. The two states account for 20 percent of industry-wide new vehicle sales.
When things get better, investors ought to see an amplified increase on the other end due to the repurchases. Hold flat in down times and explode up in good ones, very nice.
The demand for auto related items can be found in recent news from auto parts retailers like AutoZone (AZO) and Advanced Auto Parts (AAP) who both reported increased earnings in the latest quarter. The things is, people have to have cars, the demand will always be there and Jackson has built a business that can capitalize on all demand scenarios.
Trading at 9 times earnings AutoNation will be a winner when demand for auto’s returns. That, it turns out may be sooner than we think. $4 a gallon gas is already changing people behavior and there just may be a rush to trade in that SUV for something much more affordable on gas. Whether it happens now or year from now, AutoNation currently trades at a multiple that assumes it just may never happen, that is wrong..
What Jackson said today on CNBC clinched it for me:
The guy has his business set to profit no mater what happens. Electric cars? Ok. Hybrids? Sure. SUV? Got ’em. People must have a vehicle and Jackson is there to provide whatever they need from whoever produces it. With his scale it come very close to a toll bridge business. He provides people a necessity that they must replenish fairly often at considerable expense…
Disclosure (“none” means no position):Long AN, none
Sears’ (SHLD) Chairman trough his ESL and RBS Partners hedges funds purchased another 1 million shares of auto retailer AutoNation (AN)
Lampert now holds 70.66 million shares or 39.6% of the total outstanding.
Disclosure (“none” means no position):None
Another week, another post on Sears’ (SHLD) Chairman buying AutoNation (AN) shares.
Lampert added over 500,000 shares bringing his ownership to 69.6 million shares or 38.9% of the total outstanding.
Disclosure (“none” means no position):Long SHLD, none
Eddie Lampert increase his stake in auto retailer AutoNation (AN) to 69.1 million shares or 38.7% of the total outstanding this week.
For more on this read this article:
Disclosure (“none” means no position):None
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One word AutoZone (AZO), maybe technically two?
For a while now I have been speculating that the auto sector (not Ford (F) or GM (GM)) may be the way to go and that thee is value in the sector. Results from those companies may be confirming that.
AutoZone (AZO), the largest U.S. auto parts retailer, reported higher quarterly earnings Tuesday. Net income rose to $158.6 million, or $2.49 per share, in its fiscal Q3 ended May 3, from $151.6 million, or $2.17 per share, a year earlier. Expectation were for $2.44 a share.
AutoZone did not repurchase any shares of its common stock during the third quarter. The Company has $108 million remaining under the authorization. Year-to-date, the Company has repurchased 2.9 million shares of its common stock for $350 million (4% of total oustanding).
During the quarter ended May 3, 2008, AutoZone opened 32 new stores and replaced three stores in the U.S. and opened two stores in Mexico. As of May 3, 2008, the Company had 4,032 stores in 48 states, the District of Columbia and Puerto Rico in the U.S. and 130 stores in Mexico. The compnay actually saw margins increase from 49.9% to 50.2%.
Sears' Chairman (SHLD) Eddie Lampert increased his stake in AutoZone to just over 36 percent from near 31 percent recently. Lampert also increase his stake in AutoNation Inc (AN), the largest U.S. auto dealership group. He holds just under 39 percent of AutoNation.
This comes a week after Advance Auto Parts (AAP), AutoZone's chief competitor, reported that net income grew 7.9% while revenue increased 4%.
While auto sales may fall, the chief recipient will be the parts stores as older car will need to be repaired rather than replaced. Add the "customization" trend out there now, AZO looks to have momentum for the foreseeable future.
I will check out the earnings call later...
PS. Where are the CNBC pieces about Lampert's "savvy investment"? Or, do they only run stuff when they can bash him? Erin?
Disclosure ("none" means no position):Long SHLD, None
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A recent article by Sears Holdings (SHLD) Chairman Eddie Lampert gives some insight into recent buying activity.
The article, entitled "The Best Advice I Ever Got" said:
"Almost every weekend when I was 7, 8, 9, 10 years old, my father and I would toss a football in the yard or play basketball in the driveway. When we played football, he'd say, "Go out ten steps. Turn to your right." The ball would reach me just before I turned, and it would hit me right in the chest. Why would my dad do this? He told me, "If I waited for you to turn, you and the defensive player would have an equal chance to get the ball. Your opportunity is gone."
This idea of anticipation is key to investing and to business generally. You can't wait for an opportunity to become obvious. You have to think, "Here's what other people and companies have done under certain circumstances. Now, under these new circumstances, how is this management likely to behave?" The plays my father designed for me helped me learn to think ahead. Lots of days I asked him, "Why can't we just invite kids over and play a game?" In order to do something well, he explained, you have to keep practicing and preparing."
My guess is that when one looks at Lampert's recent buying spree in shares of AutoNation (AN), the above statements are the genesis. For instance, Lampert has held shares in the company since the turn of the century and is extremely familiar with it and its machinations.
That being said, while other investors are fleeing the retail auto sector Lampert has been buying about a million shares every other week for the past few months. Why?
Perhaps he sees that CEO Mike Jackson has expanded the retailer's dealership pipeline with Mercedes and BMW (BMW) dealerships, more resistant to economic downturns and much more profitable in good times than your run of the mill Ford (F) or GM (GM) one.
Perhaps he sees, that looking ahead leases on vehicles still expire requiring the leasee to either lease or buy another one and that the current stock price reflects the poor environment now, but now the upcoming surge in activity down the road?
Perhaps he knows that while credit is tight now, all that does is to suppress demand, not eliminate it. He knows the demand (desire) for a new vehicle does not "go away". The desire to get rid of an old car for a new one stays and when credit does loosen a bit, the spigot will open and the pent-up demand becomes a flood of buyers.
Also, he knows CEO Jackson manages the business for the long term. During the sluggish auto environment in 2001, many dealers responded to deteriorating demand by offering 0% loans which after even small credit losses meant the loan portfolios eventually lost money. Jackson said at the time he did not see the reasoning for "losing money on loans just to move metal". Shares tripled from then levels.
It is clear that Warren Buffett from Berkshire (BRK.a) sees it as he has purchased shares of CarMax (KMX) another auto retailer. The boys over at Leucadia (LUK) also see it with their 30% investment in auto finance company AmeriCredit (ACF) along with Bruce Berkowitz and Bill Miller who have also taken stakes in ACF.
Disclosure ("none" means no position):Long SHLD, None
He is like the Energizer Bunny, “still buying”.
Sears (SHLD) Chairman Eddie Lampert purchases an additional 700,000 share of the auto retailer AutoNation (AN) Friday bringing his owner ship to just under 70 million shares (68.96 million) or 38.6% of the total outstanding.
Lampert began aggressively adding to his stake in December of 2007 and on several occasions has added million share blocks on almost a weekly basis through his hedge funds.
Disclosure (“none” means no position):Long SHLD, none
Sears Holdings (SHLD) Chairman Edward Lampert added another 1 million AutoNation (AN) shares this week at between $16.25 and $16.50 a share.
Lampert now controls 68.369 million shares or 38.2% of the outstanding total.
Disclosure (“none” means no position):None
Sears Holdings (SHLD) Chairman Edward Lampert continued his buying of AutoNation (AN) shares adding an additional 400,000 shares on 4/30 at prices just under $16
He now controls 67.749 million shares or 37.9% of the total outstanding
Disclosure (“none” means no position):None
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Edie Lampert has once again increased his stake in autoNation (AN)
He now owns 67.3 million shares after purchasing an additional 1.1 million shares on 4/29.
He now owns 37.6% of the shares
I recently wrote about the company here.
Disclosure (“none” means no position):None
Visit the ValuePlays Bookstore for Great Investing Books
This work is licensed under a Creative Commons Attribution 2.5 License.